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Today the OIG issued a report examining the growing use of Medicare hospice care in the assisted living facility (ALF) setting. According to the OIG, Medicare payments for hospice care in ALFs grew by more than 119% from 2007 to 2012, compared to a 38% increase in spending for hospice care provided in other settings. The OIG also reports that hospices provided care for longer periods and received higher Medicare payments for beneficiaries in ALFs compared to other settings, even though hospice beneficiaries in ALFs often had diagnoses that typically require less complex care. The median amount Medicare paid for-profit hospices for care in ALFs during the five-year period was $18,261 per beneficiary, compared to $13,941 for nonprofit hospices. The OIG contends that its findings suggest that the current payment system includes financial incentives that could encourage hospices to target beneficiaries in ALFs.

The OIG recommends that CMS take its findings into account as CMS undertakes hospice reforms mandated by the Affordable Care Act (ACA). Specifically, the OIG recommends that CMS: (1) reform payments to reduce the incentive for hospices to target beneficiaries with certain diagnoses and those likely to have long stays, (2) target certain hospices for review, (3) establish claims-based quality measures, (4) make hospice data publicly available for beneficiaries, and (5) educate hospices regarding how they compare to their peers. CMS concurred with these recommendations.

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